Gender diversity in business matters
When investors think about environmental, social and governance (ESG) investing, they often focus on the environmental perspective. The social perspective is equally important. That perspective includes gender—something worth noting as we recently celebrated International Women’s Day. It also means embracing the value of gender diversity.
Incorporating a gender lens into investing involves examining many factors. These factors include a company’s overall gender diversity, equity and inclusion policies. They also include the proportion of women in senior leadership and board positions, or the initiatives being undertaken by a company to advance gender diversity, equity and inclusion within their industry. These factors are becoming increasingly relevant as support and progress continues to be made throughout the economy.
Evidence supporting the importance of gender diversity
There’s a growing body of evidence to suggest that companies with greater gender diversity tend to perform well over the long run. In 2020, the global consulting firm McKinsey & Company published the results of a study it conducted on the benefits of diversity in the business world, titled Diversity wins: How inclusion matters. The study concluded: “The business case for diversity, equity, and inclusion is stronger than ever. Taking a closer look at diversity winners reveals what can drive real progress.”
Furthermore, McKinsey found that “companies with more than 30 percent women executives were more likely to outperform companies where this percentage ranged from 10 to 30, and in turn these companies were more likely to outperform those with even fewer women.”
Specific reasons for this outperformance may include things like higher employee satisfaction, hiring from more diverse talent pools, innovation through different perspectives, or avoiding reputational risks. In sum, it appears that gender diversity in business can help companies deliver better outcomes for both investors and society, providing strong returns and helping to create a more inclusive world.
What this means from an investment perspective
The benefits of investing in companies with gender diversity are compelling. Not only can it be a smart investment, but it’s also an excellent way to contribute to a brighter, more inclusive future.
If you have any questions or if you’d like to learn more about ESG investing—please don’t hesitate to contact me.